The Time It Takes Between When Materials Are Ordered and Cash

question 145

Multiple Choice

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

• A) operating cycle
• B) cash conversion cycle
• C) assets turnover cycle
• D) sales or revenues cycle

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Definitions:

Operating Income

The profit realized from a business's operations after subtracting operating expenses from gross profit, indicating the efficiency of core business activities.

Absorption Costing

A costing method where all of the costs associated with manufacturing a product are absorbed by the units produced, including both variable and fixed manufacturing costs.

Operating Income

Earnings before interest and taxes (EBIT), representing the profit a company makes from its core operations.

Capacity

The maximum amount of work that an organization is capable of completing in a given period of time.